- During the second half of 2022, parents enjoyed monthly Child Tax Credit payments.
- Those payments are off the table for now, but the credit isn't gone.
If you're missing those monthly payments, here's what you need to know.
Last year, American families were thrown a lifeline in the form of the boosted Child Tax Credit. In 2021, the credit was worth up to $3,600 for children under the age of 6 and up to $3,000 for those aged 6 to 17.
Plus, the credit changed to become fully refundable, whereas in the past, only a portion of it was refundable. Plus, half of the credit was paid in the form of monthly installments that hit recipients' bank accounts from July through December.
Anyone who enjoyed getting those monthly payments during the second half of 2021 may be painfully aware that those payments have not come in this year. In fact, the boosted Child Tax Credit is pretty much off the table for 2022, as lawmakers were unable to pass a spending bill that allowed for the enhanced version to remain in play.
But that doesn't mean the Child Tax Credit is gone. And it's important that families realize that.
A smaller Child Tax Credit this year
Prior to 2021, the Child Tax Credit maxed out at $2,000 per eligible dependent. This year, the credit isn't gone. Rather, its maximum value will simply return to $2,000. Also, the credit won't be fully refundable, and it won't be paid in the form of monthly installments.
Rather, to claim the credit, those eligible for it will have to file a 2022 tax return in the spring of 2023. Only once that return is processed will the money from the credit come in.
That's apt to cause a shift in the way families manage their money. Last year, the monthly installment payments parents got helped with regard to cash flow. This year, parents don't get the benefit of monthly payments.
However, parents should rest assured that the Child Tax Credit is by no means gone. Rather, the enhanced version has gone away.
Is there hope the boosted credit will be restored?
Some lawmakers are still pushing to bring back the boosted Child Tax Credit -- if not the same version parents enjoyed in 2021, then at least a more generous version than what existed in 2020. But whether that comes to be is a different story.
Enhancing the Child Tax Credit is apt to come at a cost, and some lawmakers are worried a higher credit will create budgetary constraints. Also, some lawmakers are hesitant to raise the value of the credit because they don't want it to disincentivize parents to go out and work. However, imposing a work or earnings requirement could help address that issue.
All told, parents should assume that this year's Child Tax Credit will max out at $2,000 per child, and that the credit will only be payable in tax refund form in 2023. Parents who want to get their money sooner can file their 2022 taxes as soon as the IRS starts accepting returns next year. That usually happens in late January, whereas the filing deadline isn't until April 15 most years. So that's one way to expedite that money for those who need it as soon as possible.
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